2018

Product vs. System Quality

Nonconformance doesn’t always mean
the system has failed

By Dale K. Gordon

WE LIVE in an era in which complex and technologically
advanced products are produced on a regular basis. Little concern
is given to the engineering and advanced process capabilities
that are required to produce them.

The initial awe of the developments forged during the dawn of
the industrial age, such as locomotives, machine tools, steam
engines and architectural wonders—made possible by
advancements in materials and production capabilities—has
faded to indifferent acknowledgement.

With advancements in precision manufacturing, material
properties, software and process controls, there is an
expectation that process variation can be precisely controlled
and anomalies prevented from reaching customers.

From the early times of manufacturing, when the shift was made
from artisan manufacturing to interchangeable parts and mass
production, inspection of characteristics, components and product
were sufficient controls to meet customer needs and demands.

Not to oversimplify, but as the complexity of the processes
and products has increased, we have found that the process of
inspection is insufficient to reduce the risk of product failure
leading to injury and harm, let alone that the customer or end
user will reject the product as not being fit for use.

The ability to produce complex products ranging from aircraft
and spacecraft to advanced lifesaving medical devices, from
computers and microprocessors to the host of industrial and
consumer products requires complex internal organizations. These
organizations include a product design and development process
that must work with production and support functions while also
being aligned with the customer’s
expectations—meeting functional requirements and consistent
on-time delivery at a competitive price.

This complexity includes advanced inventory management
systems, complex hiring and training of workers with specific
skills and environmental management of the workplace. Also
required are financial and accounting systems to provide the
needed capital for investment in precision equipment to produce
the product, program and project management specialists to assure
on-time and on-cost completion, and significant planning and
development of manufacturing capabilities.

Add to that the intricate problem of transferring knowledge
and requirements to a vast, global supply chain that is coupled
with internal checks and procedures to make sure all the
aforementioned activities work together harmoniously and
seamlessly.

QMS standards

The complexity of the modern manufacturing organization and
the need to ensure that all aspects of business processes are
focused on meeting organizational objectives, including the
primary mission of customer satisfaction, has led to the
development of quality management system (QMS) standards such as
ISO 9001.

The purpose of a QMS similar to or based on ISO 9001 is to
help reduce the variation not only in the product, but also in
the complex and integrated business processes on which we have
become so dependent.

We know that the late W. Edwards Deming defined a system as
“a network of functions or activities (subprocesses or
stages) within an organization that work together for the aim of
the organization.”1

In the ISO 9001:2000 Handbook, Jeff Hooper wrote,
“The system approach to management is a quality management
principle that states: identifying, understanding and managing
interrelated processes as a system contributes to an
organization’s effectiveness and efficiency in achieving
its objectives.”2

Nowhere in this statement does it say anything about an
organization’s accuracy in meeting the customer
requirements for the product being delivered. This brings us to a
long-standing question from some in the quality profession about
answering mail from customers.

Often, after being on the receiving end of nonconformance or
poor product quality, customers ask what, where or how the
failure occurred in the QMS to allow this condition to reach
their facilities.

Some are perplexed about how to answer because the truth is
that the system might not have failed at all, but the
nonconformance was a result of common cause variation in the
business processes.

This allows for a certain amount of variability to exist and
ultimately results in an overall process that is outside the
capability of meeting 100% of the customer requirements 100% of
the time.

Concept of risk

The understanding that no system is 100% error proof is one of
the underlying reasons we have the terms “producer’s
risk” and “consumer’s risk.” It
doesn’t mean the organization shouldn’t improve its
processes to reduce these types of errors, but instead that the
existence of a nonconformance does not necessarily mean the QMS
has failed.

This topic was briefly debated years ago when the process of
recalling Bridgestone/Firestone tires installed on certain model
Ford Explorers vehicles called into question the capabilities of
a QMS and its relationships to the prevention of a nonconformance
from reaching the customer.3

Indeed, some nonconformance can be directly linked to a
departure or failure to follow the business processes, or a lack
of a necessary process to prevent the nonconformance. But a
nonconformance might also occur due to system capability or
process averages found to be naturally occurring or just from the
inherent intricacy of moving necessary information within complex
organizations and the business processes being used.

One example of when the system is stable and functioning and
yet failure occurs is the inability to always meet customer
delivery requirements. In one situation, which I personally
believe to be common, customer demand for product rose 20% due to
increased sales. The organization gladly accepted the additional
orders, which increased production output needs even though the
company was already struggling to meet current orders.

During the planning of product realization (clause 7.1 and 7.2
of ISO 9001), management looked at stated capacity based on
optimal conditions and decided there was enough excess capacity
to handle the increase. Yet when time came to deliver on the
customer due dates, shipments were missed and the customer asked,
“What failed in your system to allow you to miss a customer
requirement?”

Using an example from Understanding Variation: The Key to
Managing Chaos by Don Wheeler,4 if we had plotted
the output of the organization’s system for many months
prior to the increase in demand, we would have seen an operation
at a steady state of output regardless of the customer
demand.

The steady state of this process could be characterized as a
process mean bounded by some upper control limit. As quality
professionals, we know that to produce a change in the process
mean, some change to the process inputs has to occur or variation
has to be reduced.

In this case, the variables could constitute every aspect of
what goes on in the organization’s system. Product delivery
is the culmination of all of the business processes, and output
is a measure of system capability.

Variation is inherent

With respect to the quality system, where was the failure? The
failure, if there was any, was management’s not recognizing
the differential between stated and real capacity. That is the
portion of capacity that was consumed within the organization by
common cause variation such as scrap, rework, supply chain delays
or engineering changes.

Again, Deming and Henry Neave have told us variation is
inherent in our systems:

Most losses are unknown, often unrecognized, not even
suspected. We must learn to look out for two kinds of mistakes,
both of which cause huge losses beyond calculation:

Mistake one: To react to any fault, complaint, mistake,
breakdown, accident or shortage as if it came from a special
cause when, in fact, there was nothing special at all. In other
words, when it came from the system: from random variation due
to common causes.

Mistake two: To attribute to common cause any fault,
complaint, mistake breakdown, accident or shortage when it
actually came from a special cause:

There is no way of always choosing correctly between the two
types of causes, and there never will be. So we need knowledge
of procedures aimed at minimum economic loss from these
mistakes. We need knowledge of the capability of a system and
the knowledge about losses from demands that lie beyond the
capability of a system, demands often made through the
mechanism of management by objective.

We need knowledge about the interaction of forces, including
the effect of the system on the performance of people.
Interaction of forces may work for good or ill.Interaction of
forces may reinforce efforts, or it may nullify
them.5

The concept is that within all the processes a business has to
execute, there is inherent variation. If the variation in each
process is accumulated like a reliability function multiplying
each successive amount to get a total system variation, then the
total variation could exceed an acceptable system limit for
preventing any nonconformance from getting to the customer.

Even in a reliability function, in which we put items in
parallel and not in a series to improve the ability of the
system, such as contract reviews, engineering design reviews,
inspections, calibrations, audits and configuration management,
there is still an accumulation of variation.

Even devotees of process control and advanced quality methods
are not immune. Toyota, a recognized leader in manufacturing
quality, in its bid to grow and become the world’s largest
automaker by volume, also had more than double the number of
recalls industrywide in 2005 than 2004, even though the United
States registered a slight decline overall.6

The reality is that as organizations and systems get bigger
and the products being produced become more complex, there is
greater opportunity for variances in the business processes to
have an effect on the product being delivered to the
customer.

Toyota’s challenge

We can ask how the increased production objective affected
Toyota’s QMS. Did the additional stress on the system allow
more variation to creep into all of Toyota’s processes,
driving the overall distributions further outside its control
limits (the QMS) and, therefore, actually predicting the
increased recalls?

This is why the ISO 9001 QMS structure is built on
Deming’s plan, do, check, act cycle as an interactive
function, not a singular one. The QMS is all about understanding
where the process variation exists and continually improving to
meet customer needs.

Should customers lower their expectations and not expect 100%
conformance to requirements? They absolutely should not. When a
nonconformance does occur that reaches the customer, is that a
failure of the organization’s QMS? Not necessarily, but
it’s definitely another learning opportunity to reduce any
system variables that might allow a nonconformance to occur and
influence customer satisfaction.

For that situation, we have a corrective action process built
into the QMS. The best protection of quality and customer
satisfaction is to make sure the corrective functions of the QMS
are effective and functioning well.

Dale K. Gordon is vice president of quality
for MPC Products in Skokie, IL. He is an ASQ fellow, past chair
of the American Aerospace Quality Group and one of the writers of
the current AS9100 aerospace standard. Gordon earned a
bachelor’s degree in industrial engineering from General
Motors Institute (now Kettering University) in Flint, MI, and an
MBA from Butler University in Indianapolis.